COACHING

2013 Professional Education Institute 2

5 Ways to Boost Your Financial Outlook
COACHING
5 Ways to Boost Your Financial Outlook
If you quit working today, how long could you sustain yourself and your family?
How long would it take before all of your accounts dried up? A few months? A couple
of weeks? A day?
If you dont know, you are not alone. Most people are in the dark when it comes to
their nances and how they will get ahead. As a result, their nancial outlook is far from
optimistic and in some cases, it is downright grim.
Your nancial outlook is largely determined by two things. The rst is whether you have
a nancial plana way to get from point A to point B. The second is the strength of
your nancial planhow effectively and efciently the plan helps you make the jour-
ney. While some claim to have a nancial plan, it is usually nothing more than hopes,
wishes, and estimates stored in their head. That is not a plan at all.
For those who do have a written plan, it is typically just a dollar amount they hope to
have that will last them from retirement until they die. It is only a plan to survive instead
of a plan to thrive.
In this special report, we will share with you ve ways to boost your nancial outlook by
xingor creatinga nancial plan that can help you get control of your nancial future
and realize the life of your dreams.
Set or Re-evaluate Your Goals
Most nancial plans do not work because people do not put much thought into con-
structing the plan.
People pick a number out of thin air; tie it to an investment vehicle, and think that is
their plan. For example, they will say, I want to have $2 million in my stock portfolio
when I am 65. Ask them how much they need to invest and at what the rate of return
is in order to achieve that goal and they will tell you that they do not know.
If you are serious about obtaining nancial freedom, then you must set goals with
clearly dened steps and milestones along the way. If you have not set your goals
already, breakout the spreadsheets and the calculator and determine how much your
ideal lifestyle will cost. Do you need $3,000 per month? $10,000 per month? $50,000
per month? Whatever you decide, that dollar amount is how much passive income you
will need to generate.
With a denitive dollar amount in mind, you are ready to begin identifying investment
vehicles and assigning milestones to your plan. This is the difcult part and where most
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5 Ways to Boost Your Financial Outlook
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people give up. You will need to look at what you have or what you can leverage for
investing, the needed rate of return, and what investment vehicle would provide the
desired rate. In other words, if you are hoping a $2,000 investment in a mutual fund will
yield a 40% return, you had better go back to the drawing board.
Application Questions
How much money do I want to have in 3 years? 5 years? 25 years?
What are realistic rates of returns for the investments that interest me?
Are there other investment vehicles I should be investigating?
What changes do I need to make in myself today to reach my goals?
Generate Passive Income
Most people think they understand the difference between working hard for their mon-
ey and having their money work hard for them, but the number of people still trapped in
the rat race shows something different.
Creating passive income is the ONLY way out of the rat race. Period.
Most people think that monthly expenses hold them hostage to their jobs. They tell
themselves, I have bills to pay and mouths to feed. That is why I have to go to work.
That is why the mantra of live below your means spewed by many nancial gurus is
so enticing to many people. They think that if they can keep their expenses down, then
they can save more, which in turn will lead to freedom. Ask those people how much
they would need to save to get out of the rat race and most will not have even thought
that far. They are not even sure how much their scrimping and cost cutting is saving
them. All they know is that that is what they were told to do.
It is not your monthly expenses holding you hostage to your job, it is your way of think-
ing. All throughout school, teachers taught us to study hard, get good grades, and get
a safe secure joba job that provides earned income.
The rich understand that it is assets that make you nancially free, not jobs. Assets are
those items that put money in your pocket. Things like rental real estate with positive
monthly cash ow. If you can begin thinking about covering your expenses and new
purchases by buying assets instead of working more hours at your job, then you are on
your way to nancial freedom.
Application Questions
What are my total monthly expenses?
How much passive income do I need to get out of the rat race?
How can I begin generating passive income?
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Understand the Difference Between Good and Bad Debt
Once you have your nancial plan, the quickest way to derail it is to burden it with bad
debt. You create bad debt anytime you purchase something on credit that does not
create passive income for you. That brand new at screen television? Bad debt. That
week-long vacation? Bad debt. Rich Dad calls these doodads and they are all dead
ends on the path to nancial freedom.
Now, this is not to say that you cannot have any fun. In fact, you should live the life
you want. Just do not take on more bad debt to get it. You should be thinking instead
about how to buy assets to fund the purchase of these items.
The great thing about this approach is that if you buy assets to fund your purchases,
once you have paid for the purchase, you will still have the asset producing positive
cash ow. If you acquire more and more assets, you will be well on your way to gener-
ating the passive income needed to reach the milestones you established when you set
your goals.
Application Questions
How can I leverage debt into reaching my fnancial objectives?
If I have already burdened my fnancial statement with bad debt, what can I do to
help eliminate it?
Diversify Your Investments (the Right Way)
Sit down with any nancial planner and they will tell you to diversify. They will then go
on to talk about small-cap and large-cap funds. They will explain why you will need
funds that focus on this sector and a few from that sector. They will also encourage you
to invest internationally too.
There is only one problem with this diversication strategy. It is not diversication!
If you follow this advice, all you will do is spread your money across one investment
vehicle. While it is better than investing 100% of your money is one companys stock,
this type of diversication strategy is the strategy of the poor and the middle-class. True
diversication comes from investing across different investment vehicles.
No one investment is free from risk. All have strengths and weaknesses, but if you only
diversify within one asset class, you are exposing yourself completely to the weak-
nesses of that asset class.
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The rich understand that true diversication comes from investing in real estate,
commodities, businesses, and paper assets. They understand how each market af-
fects the other. They know when to get in and when to get out. They can move their
money from the asset classes that might be struggling at the moment to one that is
poised for huge gains.
Application Questions
Of my current investment portfolio, what percentage have I invested in paper assets?
In real estate? In commodities? In business(es)?
How well do I understand the strengths and weaknesses of each asset class? What
can I do to better my understanding?
What investment vehicles are producing the highest returns presently?
Can I explain why?
Educate Yourself
The nal way to x your nancial planas well as the rstis investing in your own
nancial education.
The problem is that most people have not received any nancial education at all in their
lives. The educational system does not teach people how to invest let alone where to in-
vest. As a result, most people just hand their money over to someone who sounds like he
knows what he is doing. Unfortunately, too many people pray on the naivet of individuals
and sell them a bill of goods that will not take them any closer to exiting the rat race.
People with a nancial education know what to look for and what questions to ask.
By listening carefully to the words people use, they are able to discern whether some-
one has a poor or middle class mentality or whether he or she understands how the
rich think about money. They also understand that part of the education process is
surrounding themselves with team members like an accountant, real estate agent, or
coach that can help them learn along the way.
Application Questions
What ways can I further my fnancial education?
What team members do I need to surround myself with in order to further my fnancial
education? Do these team members think like the rich?
How would I beneft from having my own rich dad in my life?
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The Bottom Line
These ve ways to xing your nancial plan will pay off instantly and in the years to
come. With a solid nancial plan, you will be on your way to achieving nancial freedom.
Remember to take the time to revisit and revise your nancial plan on a regular basis,
too. As you continue to educate yourself and gain experience from your investing, you
will nd that you may be able to accomplish more or achieve your dreams sooner by
advancing your game. Consider your nancial plan a living, breathing document that
will evolve as you do too.
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